Maybe now it’s time to think about innovation.
Pivoting to grow
Being honest, if room44 had stayed wedded to its core business at the start of 2019, we probably wouldn’t be here today. When the pandemic shut the UK economy down, we had already opened a new venture that became our growth opportunity for 2020 and 2021. Since then we’ve also added a new ‘artisanal’ product stream to our portfolio and room44 innovation consulting has resurged.
This all came about from a reading of market trends that indicated strong growth in areas that we may not have leant into without an understanding of the probable impact of world events. We were deep into the Brexit transition back in Q1 2020 so ‘change’ was inevitable. All we had to do was take it seriously.
Old business clinging on to old ways
Since Lockdown #1, many thousands of people have seen huge shifts in their work lives. Lay-offs have released people to pursue their own dreams, as well as throwing others into the grip of financial despair. One impact of this is that the UK is doing better than ever at creating new businesses and poorly at letting old ones die naturally.
In Q1 2021 Companies House recorded a record increase in new company incorporations – up by 24%. According to Fathom Consulting, the UK now hosts @4.5 million privately owned companies and more Unicorns (£1bn+ companies) than France, Germany and Sweden combined.
So, the government has made it possible for new business to start, grow and thrive with more bounceback funding, including another £1.5bn available to support start-ups* but the same financial support has also allowed businesses that were struggling to stumble on for longer. Loans, grants and furlough funds have let companies reset. The downside is that some of them should have simply stopped being.
Hope as a strategy
An article by Matthew Lynn in The Saturday Telegraph a few months back argues that old business is clogging up the very system that should help new companies grow (Recovery depends on killing Zombie companies). It’s a good point. SMEs are a tenacious bunch and won’t give up easily, but hanging on and hoping isn’t a strategy.
Building a new vision based on new market dynamics, seeing a less-than-obvious opportunity and then acting on the vision is what will help old business survive. If you have any doubt, look at the current crop of start-ups – looking at things differently is exactly what they have done.
What is innovation?
If you’re a follower of Clayton Christensen, you’ll recognise the definition of disruptive innovation as being “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”
In the context of re-imagining a business’s potential in order to survive, maybe a less ambitious definition is appropriate. How about something like – taking ideas that work in other places that we can make work here.
Business development asks you to grow your business. Innovation asks you to offer your customers something different than they can get today to satisfy a need differently, or to meet a new need entirely. This isn’t innovation in its truest sense but, if the process demands that a failing business changes what it does for the survival of the company and gives their customers something newly valuable to buy, let’s give it the benefit of the doubt.
If you’ve relied on government funding to get you through a tough patch and are worrying about how to cover the wage bill now that furlough funding is over, now is a really good time to think about a change in direction.
As the saying goes, the best time to plant a tree was twenty years ago. The next best time is today. If you’re an established business who wants to talk to an agency that has done exactly that, drop us a line.
Future thinking. Future proofing. It’s what we do.